Brokers upset over recent hike in NCDEX transaction fee

MUMBAI: Brokerage firms are upset over the recent hike in transaction charges -- of up to 150% or 1.5 times higher -- levied by National Commodity Derivatives Exchange , the country's second largest commodity exchange.

Brokerage firms or members who trade on the membership of the exchange will have to pay Rs 2.50 per lakh as charge compared to Rs 1 per lakh earlier, if they are unable to do Rs 250 crore of average daily turnover (ADT), according to the circular issued by NCDEX.

The new structure will be effective from September 1. The exchange is trying to rationalise the transaction slab structure from three-tier to two-tier to make it more uniform for members .

According to the current slab structure, members have to pay Rs 2 per lakh if they are not maintaining ADT up to Rs 100 crore, Rs 1 per lakh on Rs 100-200 crore and Rs 0.50 per lakh above Rs 250 crore.

"It is not convenient for members . We have no choice but to pass it on to clients," says C P Krishnan, wholetime director, Geojit Commotrade. It becomes difficult at times to churn out huge volumes in agriculture commodities that would lead to a lot of hassles including additional margins imposed by the Forward Markets Commission, he added.

"It is negative for all market participants as the cost of trading will go up instead of coming down, which was due for long," says Ashok Mittal, CEO of Emkay Commotrade . Hedgers and real investors, who trade relatively less volume than jobbers and speculators , are not happy.

A jobber normally buys or sells a commodity contract and exits the position quickly by booking a small profit or sometimes even a small loss. While a hedger takes up a position for long depending upon his capacity to look for sustained profits.